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BI outsourcing and emerging trends 2012


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BI continues to grow in demand in 2012 and the foreseeable future. The demand for BI/Analytics has driven the need for company investment in "Big Data" and trying to outdue competitors by exploiting advantages through the use of data patterns.

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BI outsourcing and emerging trends 2012

  1. 1. Business Intelligence OutsourcingEmerging Trend Report Simplesoft Solutions, Inc. By Paul Hansford, MS 10/2012
  2. 2. OVERVIEWAnalytics has been defined as ―the extensive use of data, statisticaland quantitative analysis, explanatory and predictive models, andfact-based management to drive decisions and actions‖ (Davenportand Harris, Competing on Analytics, 2007)Volume of Digital DataEvery day, 15 petabytes of new information arebeing generated. This is 8x more than theinformation in all U.S. libraries. Velocity of Decision MakingBy 2010, the codified information base of the 70% of executives believe that poor decisionworld is expected to double every 11 hours. making has had a degrading impact on their companies‘ performance Only 9% of CFOs believe they excel at interpreting data for senior management
  3. 3. WHERE DID BI COME FROM? The industry that has claimed responsibility for helping organizations get real value from information goes by the name “business intelligence.” This term was originally coined by Hans Peter Luhn, an IBM researcher, way back in 1958. Luhn defined business intelligence as “the ability to apprehend the interrelationships of presented facts in such a way as to guide action towards a desired goal.” The term didn’t catch on, however, until sometime after Howard Dresner, best known for his work at Gartner, used it again to breathe new life into to the data warehousing industry. Dresner defined the term as “concepts and methods to improve business decision making using fact-based support systems.”Source:
  4. 4. ―Drive the business‖ Analytics Hive/Pig Big Data ―Improve the business‖ Text analytics Performance Cloud BI Management Predictive analytics Mobile BI ―Use the data‖ Visual discovery Business Operational BI Intelligence Data integration suites―Get the data‖ Packaged analytic applications Data Data virtualizationWarehousing Dashboards and scorecards Business intelligence suites Web query/reporting On-line analytical processing (OLAP) Desktop query/reporting Extract, transform, load tools 1990swarehouses Data 2000s 2010 2015Source: BI Leadership Forum (
  5. 5. WAVES OF BI Statisticians = Reporting High = Analytics Execs, Mgrs, Workers Business Value “What will happen?” Users Business analysts “What’s Prediction happening?” Monitoring “Why did it All users happen?” Analysis “What happened?” Reporting Static & Interactive Query, Excel, Dashboards, Statistics, data Low Reports OLAP, Viz analysis Scorecards mining, optimization Tools 1980s 1990s 2000s 2010sSource: BI Leadership Forum (
  6. 6. OVERVIEW OF THE DATAPROBLEM  Estimated Global Data Volume:  2011: 1.8 ZB  2015: 7.9 ZB  The worlds information doubles every two years  Over the next 10 years:  The number of servers worldwide will grow by 10x  Amount of information managed by enterprise data centers will grow by 50x  Number of “files” enterprise data center handle will grow by 75x Source:, which was based on the 2011 IDC Digital Universe Study
  7. 7. OVERVIEW OF THE BUSINESS PROBLEMAnalytics has evolved from business initiative to business imperative Analytically sophisticated companies outperform their competition Respondents who say analytics Organizations achieving creates a competitive advantage a competitive advantage with analytics are2010 37% 57% increase 2.2x more likely to substantially outperform2011 58% their industry peers Ratio of respondents who indicated analytics creates a competitive advantage to those who indicated it did not and the likelihood they also indicated their organizations was “substantially outperforming their competitive peers.” The ratio was 2.0 to 1 in 2010. Source: The New Intelligent Enterprise, a joint MIT Sloan Management Review and IBM Institute of Business Value analytics research partnership. Copyright © Massachusetts Institute of Technology 2011
  8. 8. OVERVIEW OF THE PEOPLEPROBLEMData volume is growing exponentially without a doubt…In the past, the most difficult problem for businesses was how tostore all the data.The challenge now is no longer to store large amounts ofinformation, but to understand and analyze this data, make adecision, and take action.This leads to the people problem, who can analyze the data andcrunch the numbers and make sense of it?
  9. 9. PEOPLE SKILL SHORTAGE There is going to be significant shortage of analytical talent. Indeed, the situation might get worse before it improves, due partly to the emergence of ―big data.‖ For example, a report released last May by the McKinsey Global Institute estimated that by 2018 in the U.S. alone, there could be an unmet need for 140,000 to 190,000 workers with deep analytical capabilities for analyzing big data. To boot, the creation of business analytics tools takes more than just traditional software development skills, it also calls for high-end math capabilities given the emphasis on data mining, statistical sampling and forecasting. India produces about 690,000 math and sciences graduates each year, according to a study released Friday. The comparable number for the U.S. is 420,000.Source:
  10. 10. TYPES OF ANALTICS OUTSOURCING Knowledge Process Outsourcing (KPO) is the outsourcing of high-end business functions in an organization. These functions include both core and non-core activities. Analytics Outsourcing (AO) is a type of KPO.1 Analytics outsourcing, which deals with the application of computing resources, statistics and operational research to solve business and industry problems, is fast becoming the most sought after outsourcing vertical.2  Customer and Marketing Analytics  Risk Management Analytics  Operations and Data Analytics  Finance and Investment Analytics  Supply Chain Analysis3  Pharmaceutical analysisSource: 1.
  11. 11. WHY BUSINESS ANALYTICS MATTERTHE NEED FOR ANALYTICS IS PERVASIVE ACROSS BUSINESS ANDINDUSTRY The healthcare industry spends $250 - $300 billion on healthcare fraud, per year. In the US alone this is a $650 million per day problem.1 One rogue trader at a leading global financial services firm created $2 billion worth of losses, almost bankrupting the company. $93 billion in total sales is missed each year because retailers don‘t have the right products in stock to meet customer demand. 5 billion global subscribers in the telco industry are demanding unique and personalized offerings that match their individual lifestyles.2 Source: 1.Harvard, Harvard Business Review, April 2010. 2,IBM Institute for Business Value, The Global CFO Study, 2010.
  13. 13. ANALYTICS OUTSOURCING TRENDS Viral Thakker, executive director, performance and technology services KPMG pointed out some of the emerging/growth areas in analytics:  Customer analytics for the energy and utilities sector  Fraud analytics in retail banking  Cyber-analytics to detect cyber crime and terrorism  Learning analytics to assess academic performance Other trends that could emerge are:  Cloud-based BI tools could see proliferation  Social network data mining for customer analytics  ‗Big data analytics‘— Big data refers to the tools, processes and procedures allowing an organization to create, manipulate, and manage very large data sets and storage facilities.Source:
  14. 14. MAJOR OUTSOURCE PROVIDERS There are several players in the AO marketplace, but there few analysts that are ranking them or are premium priced reports. This may be because the AO trend is early in adoption and global 1000 companies are the main clients. The Top Analytics suppliers are: Top Providers GenPact* Fractal Analytics WNS Accenture* Capgemini* Cognizant EXL Services HP IBM Infosys TATA Consultancy Services (TCS)*• Market LeadersThe details can be bought for $15,000.00Source: IDC MarketScape: Worldwide Business Analytics BPO Services 2012 Vendor
  15. 15. RISKS & KEY ISSUES IN THE KPO SECTOR  Skills Acquisition and Retention  For India, it will be a major challenge with high annual churn rates and wage inflation playing dampener.  IP Management & Data Security  Outsourcing high-end functions to an offshore location involves the exchange of confidential information, especially in segments such as financial services and biotech.  Training and Development  Be it legal processes, pharma outsourcing or financial services outsourcing, any knowledge process requires familiarity with the concerned domain as it exists in the client country.Source:
  16. 16. RISKS & RECOMMENDATIONS FOCUS ON: 1  Reduction in costs  Ability to scale-up and scale down resource  Making IT provision a contractual relationship  Access to skills, ally with them and bring them in-house2  Focus on core competencies BE AWARE OF:  Privacy risks are a concern  Intellectual Property rights are a concern  Increasing costs are a concern  Domain specific knowledge  Confidentiality This is a trend that is not going away but will continue to grow.Source:
  17. 17. ASSESSMENT Niche analysts project that Big Data/ business analytics will be a 50 billion dollar market in the next 5 years, therefore outsourcing will increase because of skill shortages.Source: Wikibon 2012 Big Data Market Size and Vendor Revenues report
  18. 18. LESSONS LEARNED Analytics outsourcing is a niche market of the KPO/BPO category It is a source of competitive advantage  Combining business problems, people, technology, and science skills  Solving important and hard problems to help decision making It is growing rapidly as outsourcing activities BI is a form of analytics i.e. deriving value from data Children need to take math seriously. It is an important current skill!
  19. 19. REFERENCES1. F. Sen and M. Shiel, Human Systems management, 2006, From business process outsourcing (BPO) to knowledge process outsourcing (KPO): Some issues, IOS Press, 145–1552. Susan M. Mudambi and Stephen Tallman, Journal of Management Studies, December 2010, Make, Buy or Ally? Theoretical Perspectives on Knowledge Process Outsourcing through Alliances.3. Davenport, T. H., & Harris, J. G. (2007). Competing on Analytics. Boston: Harvard Business School Press.4. David Kiron, Rebecca Shockley, Nina Kruschwitz, Glenn Finch and Dr. Michael Haydock , Analytics: The Widening Divide: How companies are achieving competitive advantage through analytics, November 7, 2011, MIT Sloan Management Review